WASHINGTON – Oct. 24, 2011 – With distressed properties accounting for 30 percent of existing-home sales, more real estate professionals are finding a growing part of their job is offering struggling homeowners “cash for keys.”
In the “Cash for Keys” program, homeowners who are facing foreclosure are typically offered $500 to $2,500 if they agree to move out within 30 days (and leave the place clean, too). The program frees homeowners from their obligations while getting a little extra money for moving expenses and avoiding a ruined credit profile from a foreclosure. It also allows the lender to not incur the extra costs of an eviction.
The “Cash for Keys” program is expected to become more mainstream for handling short sales too, not just foreclosures. For example, Bank of America is piloting a program in Florida that pays up to $20,000 to short sellers as well as forgive their loan deficiency.
Banks are looking at offering more incentives to short sales since their losses tend to be far less than a foreclosure. For example, foreclosure properties tend to sell for 40 percent below non-comparable non-distressed properties while short sales tend to sell for 20 percent less.
“The more the inventory builds up, the more generous the cash for keys from clients,” Benjamin Barber, a senior sales specialist Green River Capital LC in West Valley, Utah, told MSNBC.com.
Real estate professionals often deliver the “cash for keys” offer to homeowners. And as more real estate professionals continue to find foreclosures and short sales an increasing part of their job description, they’re seeking extra training in how to handle such situations with homeowners and navigate the often-complex transactions.
About 21 percent of National Association of Realtors® members hold special certifications that help agents better handle distressed property – that’s up from 12 percent last year. For example, in one such designation, the Short Sale & Foreclosure Resource (SFR), real estate professionals learn how to aid buyers and sellers through the short sale and foreclosure process.